California might have found a way to decrease its $19 billion state deficit in an unconventional way. The state’s legislature is considering a bill that will let the Department of Motor Vehicles investigate digital advertising on licenses plates.

The bill, proposed by Sen. Curren D. Price (D), has already unanimously passed the state Senate and is currently being reviewed by the Assembly. If it passes, the California DMV will partner with innovation companies to research, develop and institute Digital Electronic License Plate (DELP) technology at no cost to the department or the state. Funding, estimated to be about $200,000, would come from companies interested in developing the plates or other private vendors interested in advertising on the trial devices. A small San Francisco tech company named SmartPlate is already on board to produce a prototype.

The device would look like a standard license plate when the car was in motion, but switch over to a digital ad when the vehicle stopped for four seconds or longer. The license plate number would be visible in some capacity at all times.  

Revenue would be generated in two ways: Companies would pay to advertise on the plates and motorists could purchase personalized messages and/or logos that flash on the back on their vehicles (think of it as a dynamic vanity plate). All interested advertisers would contact the DMV directly.

“State governments are facing unprecedented budget shortfalls, and are actively rethinking the use of existing state assets to create new ongoing revenue opportunities,” Price explained in a press release.  “This legislation provides a unique opportunity for California to work in partnership with some of the state’s most innovative enterprises to rethink how we can use our most basic assets to achieve greater efficiencies and cost savings, while generating new revenues for the state.”

Price believes that the digital license plates will not only bring in additional revenue for the cash-poor state, but create jobs for residents in the private sector. It will conversely eliminate state spending by streamlining the current process for creating, distributing and registering license plates (primarily by decreasing the amount of staff needed to complete the process.) In addition to the new revenue stream, the license plates would be able to broadcast critical real-time traffic updates and public information like Amber Alerts.
The bill has no apparent opposition thus far. Gov. Arnold Schwarzenegger (R) and the California Highway Patrol have decided to stay neutral until the bill reaches their offices. If it passes, the DMV would have until Jan. 1, 2013 to figure out if the license plates are feasible.

While it stands to reason that a $19 billion state deficit will inspire some creative thinking, we can’t help but point out the following problems they might find with California’s prospective money-making scheme.

Safety Risk
: People already have enough distractions while driving without shiny, flashing digital advertising making them turn their heads.  

Property Rights: Some drivers may want to pay to broadcast their allegiance to sports teams or alma maters, but that doesn’t mean they want to be a mobile billboard for a private corporation with which they have little or no affiliation. If drivers are willing to turn their cars into mobile billboards, they should get a cut of the revenue.                

Loss of Jobs: Streamlining the current license plate registration process will no doubt eliminate some states jobs and those laid-off individuals aren’t necessarily going to be the ones employed in the new jobs created by the private sector

Profit Margin: At some point, California will likely have to pay distributors to produce the plates. Eliminating that expenditure from the initial trial process won’t project adequate profit margins and the state won’t know how much net revenue the devices actually make.

What are some other crazy ways states have tried to make money? Check out The Most Budget-Strapped States to find out!

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